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November 20, 2012

New Index Is the Kinder, Gentler S&P 500

Modeled on the S&P 500, the S&I 100 aims to identify high-impact results for donors.

Most donors consider nonprofit performance important, but do not have an easy way of knowing whether their contributions are doing the most good.

Last week, the Social Impact Exchange sought to change that as it rolled out an index of U.S. nonprofit organizations designed to provide proof of results.

The S&I 100, which is modeled on certain aspects of the S&P 500, tracks the number of people served across the portfolio of the top nonprofits in the same way the S&P tracks the profitability of large-cap U.S. companies.

Donors can choose from 100 high-impact nonprofits and nearly 16,000 local affiliates implementing their solutions. The new index features models that address the country’s most pressing issues in education, health, youth and poverty.

“Right now, donors have no easy way of knowing which nonprofits are truly effective at helping people in need, which means that fewer charitable dollars are going to those programs that can do the most good,” Alex Rossides, the Social Impact Exchange’s president, said in a statement.

“By taking the guesswork out of giving, the S&I 100 has the potential to transform individual philanthropy the same way the S&P 500 changed investing for individual investors.”

The exchange screens the 100 nonprofits for evidence of impact through third-party verified studies—made available to donors on the website—and includes them in the index only if they have the ability to serve more people in need.

When donors visit the site, they can search for high performing nonprofits in the issue areas and locations they most care about. Once they select a nonprofit, the S&I 100 allows them to give directly to the organization in a few steps.

The Social Impact Exchange said the number of organizations on the S&I 100 will grow as it continues to reach out and identify additional nonprofits that meet the index’s criteria.

The exchange listed major foundations, including the Robert Wood Johnson Foundation and the William and Flora Hewlett Foundation, among its supporters. It said it is also working with donor advised funds, such as Schwab Charitable, to offer the S&I 100 to their philanthropic clients.